At Common law, "Caveat Emptor" (Buyer Beware) ruled the area of real estate sales. Sellers had no obligation to disclose latent defects to a prospective buyer. Certainly, a Seller was not allowed to make a false statement about the condition of the property or to lie in response to a direct question, but the thorny area was how to deal with the failure to offer negative information about the property. Under the doctrine of caveat emptor the seller's silence (failure to disclose defects) could not be the basis for a misrepresentation claim. And, in some cases, even where the Seller has made statements about conditions ("Nope - no termite damage in this house") courts have been unwilling to assist a Buyer who relies on the representation without engaging in his/her own inspection. However, the "modern trend" in the law has been to see more and more obligation placed on the Seller to come forward with known information that might impact on the demand for the property. We have all seen cases in texts such as:
Reed v. King: Seller failed to disclose that the house had been the scene of a murder a decade prior.
Stambovsky v. Ackley: Seller failed to disclose that the house had a reputation for being haunted - a reputation that the seller helped to create.
Hess v. Chase Manhattan Bank: Seller, a bank that had taken the property by foreclosure, failed to disclose a known, ongoing EPA investigation of the property for groundwater contamination.
But in each if these cases, the sales took place prior to the heightened prevalence of the internet (Approx 1981, 1989, and 1999 respectively). If the seller's silence was material, then the buyer must also be able to prove reasonable reliance. In the pre-Google search days, the murder, the haunted reputation or the investigation would not be readily discoverable by an out of town buyer. But today, a simple internet search on the property address would likely have turned up this information. Is a court now justifies in turning the responsibility back upon the Buyer to make reasonable internet inquiry on the object of a real estate purchase? Courts place the burden on buyers to do reasonable home and pest inspections or suffer the consequences of not having done so. Will courts see information searches, no longer onerous, as the new norm in protecting against failure to disclose?
Oddly, with all the "before you buy a home..." advice sites on the internet, I couldn't find a single one that suggested doing an internet search on the address before buying. Yet, when I recently looked at a condo for a potential purchase, the first thing I did after viewing the property was a google search.
Selling a haunted house: